Non Tariff Barriers

With the reduction of tariff barriers under GATT there had been a growing emergence of non- tariff barriers adversely affecting free trade notion and norms. The GATT has no effective measure to check the phenomenon till the Uruguay treaty was signed.

The following are the major non tariff barriers being practiced:

1. Variable levies: these are a tax on goods collected when they are passing through the customs of the importing nation. They are not fixed. When the world market price of the commodity imported falls the levy is raised and vice versa. It leads to a stabilization effect on domestic price level. The European Union used it on agricultural imports prior to GATT in 1994. Now, the EU has converted variable levies into import tariffs.

2. Export restrictions: a country may put restrictions on its exports by raising export duties or implementing export quota. This may be to balance its domestic supply of exported goods. This may also be for restricting supply into the world market to arrest the falling prices of the exportables or to intensify international shortage to raise prices and raise export revenues.

3. Consumer protection legislation: this is a kind of trade barrier when each nation follows its own standard and legislative procedure. When exporters have to deal with multiple regulations in these regard, their transactions costs rise. This may also require extensive modifications in same products to satisfy specific requirements of different countries based on regulatory differences.

4. Health regulations: these relate to the physical condition of certain goods such as agricultural products entering into a country. For instance, some countries have banned the use of DDT. Sometimes, tract health regulations may be applied in order to restrict imports.

5. Child labour regulations: some developed countries may restrict imports from developing countries on the ground of forbidding the imports of products such as Carpets etc using child labour.

6. Carrier of origin requirements: importing countries may insist on its flag-carrier goods transported by the ships must be registered in that country or using its national airlines only. This can be directly used as tariff by raising the charges of the carrier or as import quota by expressing non availability of the said transport to the exporters during a period.

7. Discriminatory voluntary import expansion: voluntary import expansion may sometimes be undertaken by a country to balance its trade relation with the other trading partner. For instance, America may induce Japan to increase her imports of American goods voluntarily. This may lead to increase in the American exports to Japan without any change in terms of trade. This however, implies a discriminatory approach against other exporting countries to Japan and is against free- trade norms.

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